NEW YORK — Two Pennsylvania-based Outfitters had drastically different second-quarter results as one fulfilled its fashion fantasies and the other owned up to merchandising miscues.
Philadelphia-based Urban Outfitters Inc. said customers’ strong response to its fashion offerings in all three of its brands paved the way for it to report double-digit growth in both profits and sales in its second quarter.
However, Warrdendale, Pa.-based American Eagle Outfitters fell behind the tempo of spring fashions, driving its quarterly net income down about one-third.
For the three months ended July 31, Urban Outfitters landed 2 cents ahead of consensus estimates as income nearly doubled to $6.3 million, or 32 cents a diluted share, 98.1 percent higher than income of $3.2 million, or 18 cents, reported in the corresponding period last year.
Sales shot up 25.6 percent to $101 million from $80.4 million, and same-store sales increased 10.6 percent with Anthropologie up 14.6 percent and Urban retail ahead 7.9 percent.
"This is a chairman’s dream call," Richard A. Hayne, chairman and president, said on a conference call.
He noted the best categories, in descending order of sales strength, were: women’s apparel, accessories and home. At Urban stores, he said the men’s business, which has languished throughout retail in recent seasons, is off to a good start and is now comping better than women’s.
For the first half, income rose 155.6 percent to $11 million, or 58 cents a diluted share, compared with income of $4.3 million, or 25 cents, in the year-ago period. Sales moved 28.1 percent higher to $195.1 million from $152.2 million.
Although in line with consensus estimates, American Eagle Outfitters said income retreated 34.1 percent to $10.1 million, or 14 cents a diluted share from $15.3 million, or 21 cents, in the year-ago period. Sales for the three months ended Aug. 3 gained 9.2 percent to $319.2 million from $292.4 million. Overall, comps fell 5.5 percent and were down 4.8 percent at AE stores.
Sales in its Bluenotes/Thriftys operation slipped 11.3 percent to $18.8 million from $21.2 million and were down 13.9 percent on a comp basis."Our second-quarter performance was disappointing and certainly below our financial goals," Roger Markfield, president and chief merchandising officer, said on a conference call. "Mall traffic and spending patterns have been inconsistent, and the retail environment, especially in the teen space, has been very competitive."
To help stop the bleeding, Laura Weil, chief financial officer, said the company will further cut expenses and lower inventory in the back half.
For the back-to-school season, sales have started slowly in August and are trending below plan. Although the men’s business is off to a slow start, Markfield said women’s comps are improving as the assortment is stronger and more fashion-right than the spring’s. For the six months, income retracted 26.1 percent to $22.8 million, or 31 cents a diluted share, compared with income of $30.9 million, or 42 cents. Overall, sales climbed 9.8 percent to $597.1 million from $543.9 million, while consolidated comps fell 5.7 percent and, at AE stores, 4.9 percent. Bluenotes sales fell 12.7 percent to $36.3 million from $41.6 million.
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